Balancing App Monetisation and the User Experience

By Claudia Dreier-Poepperl

We are all familiar with this situation – you’ve opened your app to either play a game or perform a task but you can’t seem to do just that. You either have to navigate your way past ads before you can see anything or the app experience is heavily punctuated by ads. You get that app owners need to make money from apps but you can’t shake the thought of how much better the experience would be if you didn’t have to deal with this inconvenience.

Striking the right balance with app advertising is not always the most straightforward process for app owners. On one hand, there is a lot of money to be made from apps and advertising provides a good route to getting a share of the money. In theory, the more ads you have, the more money you can potentially make. However, the practice can be very different because, on the other hand, too much advertising can put users off using an app altogether.

As things stand, overall click-through rates stand at 0.05% across all ad formats. That is five clicks per 10,000 impressions. And with an average cost per click cost at $2.14 you don’t have to be a maths genius to work out that you’ll need a lot of ads to make serious money. Some app owners have a significant amount of daily users and consistent daily impressions which makes the low percentage of ad interaction less of a problem but for many app owners, finding daily active users can be something of a challenge, regardless of how well put together and useful the app is.

Take the humble calculator for example. We all have one on our phones that we rarely use but will never delete for the fear of not having one when we need it. The app might never be deleted but it will rarely be used and will frustrate app owners’ in-app advertising campaigns. It’s easy to see why there can be a temptation to load up the app with as many ads as you can reasonably fit in but it doesn’t have to be like this.

Making money from apps is undoubtedly important but so is user retention. No one wants their app to be deleted due to something as avoidable as ‘having too many ads’. So how can app owners address this conundrum of user experience and monetisation? How can you make sure your desire to make money from the effort you have put into your app doesn’t become the pain point that will drive users away?

Monetising anonymised data

One option, especially for those app owners with significant amounts users, is to sell anonymised data to third-parties. Data generated from user activity can provide insight into trends that can influence product updates and developments. It’s a straightforward way to generate revenue but there is the potential issue of privacy here and app owners must make sure that users are made aware of this before the sign up to use their apps.

Offering an opt-in approach that allows users to decide on whether or not they want to be included in the data that is captured and sold is one way to mitigate this issue. Either way, it is essential that the data is fully anonymised so that users can have maximum confidence.

Adding a secondary functionality

Another option is to integrate a secondary functionality that separates the advertising from the in-app experience. A common SDK is the caller ID SDK that tells users who is calling even if the number is not saved in their contacts. The call summary page, which appears at the end of the call, is served with targeted ads, providing app owners with constant revenue from both active and inactive users.

With CPMs in the region of 150 per user per month and the option of a subtle re-engagement link that takes users back to the app, it’s easy to see why this is an increasingly popular option. Apps like Mega Voice Changer and Simple Notepad have seen their app revenue increase by more than 10-fold within a month of integrating an SDK to their app and active users more than doubled (14% to 33%) as a result.

Investing in paid user acquisition

Paid user acquisition also provides a great way to grow an app’s user base. We’ve already touched on how useful having a significant daily active user base can be and buying app installs can be a great way to get to that point. By investing in effective paid user acquisition programs, app owners can grow their user base and put themselves in a better position to earn more without causing any inconvenience to users. More users mean higher CPMs which translates to more revenue.

The app industry is only going to get more competitive and app owners will need to think outside the box if they want to make the most of the opportunities that are available. Reports suggest that global overall revenues are set to reach $102 billion by 2020 and app owners need to make sure they are well placed to get their share of this pot of money. Finding the right balance will be vitally important and may prove to be the difference between just about hanging on and thriving in the Android app market.

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